Our politcial leaders apparently have their own tax planning methods, they just don’t pay. For the rest of there is proactive tax planning.
As most of you know I regularly preach about proactive tax planning. I would rather have my clients get more money in their paycheck than get a large refund. The rationale is that you should keep as much of your money in your pocket as possible so that you can save and invest it rather than give the government a no interest loan. If you regularly get a big refund you may want to think twice.
During his State of the State address Governor Arnold Schwarzenegger said “The truth is the State of California is in a state of emergency” referring to the state’s $42 billion deficit. Because of the deficit the state is planning on issuing IOU’s to taxpayers that are due a refund. As more state Governors deal with unbalanced budgets and declining revenues the IOU model will become more popular. Be assured that they won’t accept IOU’s from taxpayers who owe money.
If you lack the discipline to save there is a solution. Change your withholdings now so you get the additional money in your paycheck then set up an account with ING Direct (www.ingdirect.com). Once the account is established you can set up automatic funds transfer from your checking account. Voila, you will start to accumulate your “refund” and will earn interest as well.
If you gave questions about this or any other tax issue feel free to call me at 678 624 4775 or send an email to Peter@TarantinoCo.com